EXHIBIT 10.16
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of November 6, 2000 (hereinafter
"Agreement"), by and between PSINet Inc. (hereinafter "the Company"), a New York
corporation with its principal place of business located at 00000 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000 and Xxxxx Xxxxx (hereinafter "the Executive").
WHEREAS, the Company has determined that it is in the best interests of
the Company to delegate certain management responsibilities of the Company to
the Executive;
WHEREAS, the Executive is willing to provide his services as an
employee of the Company for the inducements and on the terms and conditions set
forth below in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT POSITION.
(a) POSITIONS AND DUTIES. The Company hereby employs the
Executive to serve as Executive Vice President as well as
President and Chief Operating Officer, PSINet International,
and the Executive hereby accepts such employment in the
capacity and subject to the terms and conditions hereinafter
set forth. This position is a corporate officer position and,
as an officer of the Company, the Executive must stand for
election by the Company's Board of Directors (the "Board")
each year of the Term (as defined in Section 2 hereof). The
Executive shall have such powers, duties, authority, and
responsibilities as are (i) consistent with such position,
(ii) assigned to such offices in the Company's By-laws, and
(iii) reasonably assigned to the Executive by the Chairman and
Chief Executive Officer of the Company. The Executive accepts
such employment and agrees to remain in the employ of the
Company and provide management services to the Company, as
determined by and under the direction of the Chairman and
Chief Executive Officer
(b) LOCATION OF EMPLOYMENT. The principal place of employment
of the Executive shall be Geneva, Switzerland until June 30,
2001, unless earlier terminated or otherwise modified pursuant
to the terms of this Agreement. As of July 1, 2001, the
principle place of employment of the Executive shall be in the
greater Washington, D.C. area. The Executive shall be
available to travel to the extent reasonably required to carry
out the duties and responsibilities as Executive Vice
President or President and Chief Operating Officer, PSINet
International or as otherwise may be reasonably required by
the business of the Company.
(c) MANAGEMENT RESPONSIBILITIES. The Executive shall at all
times perform his responsibilities and duties with appropriate
care and consistent with his position as may be assigned by
the Chairman and Chief Executive Officer of the Company and
shall at all times exercise reasonable judgment and discretion
in the performance of such responsibilities and duties.
2. TERM OF EMPLOYMENT. The initial term of the Executive's employment
under this Agreement shall commence as of the date of this Agreement and shall
terminate on the third anniversary hereof (the "Initial Term") subject to
earlier termination as provided in Section 6. After the Initial Term, this
Agreement shall be automatically extended each year for an additional one (1)
year period (each, a "Renewal Term"). The Initial Term together with any Renewal
Term are referred to herein collectively as the "Term."
3. COMPENSATION.
(a) BASE SALARY. The Company shall pay the Executive a base
salary at a rate of $360,000.00 per year beginning on the date
hereof. Beginning on January 1, 2001 and January 1 of each
subsequent year thereafter, the Executive's base salary shall
be increased at a minimum by an amount equal to five percent
(5%) of the Executive's then current base salary. The
Executive's base salary shall be subject to additional
increases at the discretion of the Chairman and Chief
Executive Officer of the Company subject to the approval of
the Compensation Committee of the Board (the "Compensation
Committee"). The Executive's base salary shall be payable in
such installments as the Company regularly pays its other
salaried employees. All payments shall be
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subject to the deduction of payroll withholdings taxes and
similar assessments as required by law or by further agreement
with the Executive.
(b) PERFORMANCE BONUS. The Company will pay the Executive a
bonus subject to the successful completion of the objectives
established for the Executive's performance for each calendar
year during the Term. The performance criteria will be issued
separately by the Chairman and Chief Executive Officer of the
Company with respect to each calendar year during the Term,
and may be changed, with mutual fairness, from time to time as
situations develop. The target bonus for the one-year period
ending December 31, 2000 will be a total of up to $360,000.00.
Separate criteria will be established for the Executive's
entitlement for the year starting January 1, 2001. Bonuses in
subsequent years during the Term will be at least equal to the
amount of the bonus during the previous calendar year.
(c) ADJUSTMENT FOR DIFFERENTIAL TAX RATES. If necessary, while
the Executive's principal place of employment is located in
Geneva, Switzerland under this Agreement, the Company shall
"gross up" the Executive's base and bonus compensation so that
the Executive's after-tax compensation during his tenure as
President and Chief Operating Officer, PSINet International,
shall not be less than he would have had if stationed in the
United States for such period and earning the identical
compensation. In other words, if the combined relative
personal tax rate on such compensation is increased by reason
of the Executive's location in Switzerland, the Company shall
increase the compensation such that the after-tax results to
the Executive shall eliminate any loss in compensation
otherwise caused by the increased tax rate.
(d) COLA. While the Executive's principal place of employment
is located in Geneva, Switzerland under this Agreement, the
Company shall pay to the Executive, if indicated by a
Runzheimer or similar analysis of the differential cost of
living between the metropolitan Washington, D.C. area and
Geneva, Switzerland, a Cost of Living Adjustment (in the form
of monthly additions to his base salary), not to exceed 15% of
such salary.
(e) STOCK OPTIONS. On the first anniversary of the date of
this Agreement and each subsequent anniversary date during the
Term, the Company shall grant the Executive options to
purchase 25,000 shares of the Company's common stock (the
"Options") pursuant to the Company's Executive Stock Incentive
Plan (the "Plan") or another option plan of the Company, such
grant being subject to the terms of this Agreement and the
Executive's continued employment at the time of the grant and
evidenced by an option agreement in such form and under the
terms and conditions set forth in the applicable plan.
(f) VESTING OF STOCK OPTIONS. In the event of (i) a Change in
Control (as defined in Section 3(g) hereof); (ii) the
termination of the Executive's employment by the Company for
any reason other than for Cause (as defined in Section 6(c)
hereof); or (iii) the termination of the Executive by the
Company because of the Executive's death or disability, the
Company shall immediately vest all of the unvested stock
options the Executive has received prior to the date of the
Change in Control or Date of Termination (as defined in
Section 6(j) hereof), as applicable.
(g) CHANGE IN CONTROL. As used in this Agreement, "Change in
Control" shall mean: (i) the shareholders of the Company
approve an agreement for the sale of all or substantially all
of the assets of the Company; or (ii) the shareholders of the
Company approve a merger or consolidation of the Company with
any other corporation (and the Company implements it), other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent more than eighty percent (80%)
of the combined voting power of the voting securities of the
Company, or such surviving entity, outstanding immediately
after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as
defined below) acquires more than thirty percent (30%) of the
combined voting power of the Company's then-outstanding
securities; or (iii) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (1) the
Company or (2) any corporation owned, directly or indirectly,
by the Company or the shareholders of the Company in
substantially the same proportions as their ownership of stock
in the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange
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Act), directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined
voting power of the Company's then outstanding securities.
4. FRINGE BENEFITS; AUTOMOBILE ALLOWANCE.
(a) During the Term, the Executive shall be entitled to the
maximum benefits that are generally provided to all senior
executives of the Company under any life insurance, group
insurance, medical, retirement, pension or other employee
benefit or incentive plans or pursuant to other arrangements
or understandings (excluding any equity, equity option or
equity bonus plans), so long as any such plan, benefit,
arrangement or understanding remains generally available to
all other senior executive officers of the Company.
(b) During the Term, the Company shall provide the Executive
with a suitable automobile with the Company bearing all
reasonably related costs (insurance, registration, leasing,
fuel, and maintenance).
(c) During the Term, the Executive shall be entitled to
financial and tax advice at the Company's expense through the
Xxxxx Companies up to a maximum amount of $7,000.00 per year.
(d) During the Term, the Executive shall be entitles to four
(4) weeks paid vacation each year which can accumulate to a
maximum of six (6) weeks.
(e) While the Executive's principal place of employment is
located in Geneva, Switzerland under this Agreement, the
Company shall (1) reimburse the Executive up to $20,000.00
(per year) for the personal travel expenses of the Executive
or his immediate family (wife and/or children) between
Switzerland and the United States; (2) pay for a suitable
rental unit for the Executive in or near Geneva, Switzerland,
including all utilities, parking and related costs; (3)
provide the Executive with mobile telephone service as well as
home telephone lines to support the Executive's business
requirements.
(f) The Company shall reimburse the Executive up to
$100,000.00 ("Relocation Amount") for his reasonable moving,
packing, and travel expenses (including reasonable travel by
the Executive and his spouse to prospect for a home) incurred
in connection with the Executive's relocation from Geneva,
Switzerland to the greater Washington, D.C. area
("Relocation"). The Executive's "target" date for completing
his Relocation to the greater Washington D.C. area shall be
October 1, 2001. The Company agrees to provide the Executive
with a gross up for income taxes due by the Executive for the
Relocation Amount (the "Gross Up Amount"). In consideration of
the Company paying said Relocation Amount and Gross Up Amount
to the Executive, the Executive agrees that should he
terminate his employment with the Company without Good Reason
pursuant to Section 6(e) herein within two (2) years after the
date of his Relocation or be terminated by the Company for
Cause (as defined in Section 6(c) herein) within two (2) years
after the date of his Relocation, the Executive shall pay the
Company the Relocation Amount plus the Gross Up Amount within
thirty (30) days of his Date of Termination with the
understanding that the Relocation Amount and Gross Up Amount
for which the Executive shall be liable will be reduced by
one-twenty fourth (1/24th) for each full month of continuous
employment after the date of his Relocation. If the Executive
terminates its employment without Good Reason pursuant to
Section 6(e) herein at any time prior to his Relocation or is
terminated by the Company for Cause (as defined in Section
6(c) herein) at any time prior to his Relocation, then the
Executive is not entitled to any Relocation Amount or Gross Up
Amount.
5. EXPENSE REIMBURSEMENT. In addition to the compensation and benefits
provided in Sections 3 and 4, the Company shall, upon receipt of appropriate
documentation, reimburse the Executive for his reasonable travel, lodging,
entertainment, and other ordinary and necessary business expenses incurred in
the course of his duties on behalf of the Company during the Term.
6. TERMINATION. The Term is subject to early termination as provided
below:
(a) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S
DISABILITY. If at any time during the Term, the Company
determines in good faith that the Executive has been unable,
as a result of
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physical or mental illness or incapacity, to perform his
duties hereunder for a period of either (i) one hundred eighty
(180) consecutive days during any twelve-month period or (ii)
ninety (90) consecutive days during any twelve-month period if
the Executive's physical or mental illness or incapacity would
reasonably be expected to continue for another consecutive
ninety (90) day period after such initial ninety (90) day
period, the Term may be terminated by the Company upon thirty
(30) days' written notice to the Executive. Should the
Executive be terminated pursuant to this Section 6(a), he
shall be entitled to Termination Payments as provided for in
Section 6(g).
(b) TERMINATION BY THE COMPANY BECAUSE OF THE EXECUTIVE'S
DEATH. In the event that the Executive's death occurs prior to
the expiration of the Term, the Term shall terminate as of the
date of the Executive's death. Should the Executive be
terminated pursuant to this Section 6(b), he shall be entitled
to Termination Payments as provided for in Section 6(g).
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Executive's
employment may be terminated by the Company at any time for
"Cause." In the event of a termination for Cause, all salary
and benefits otherwise payable to the Executive shall cease
immediately upon such termination. For purposes of this
Agreement, the Company shall have Cause for termination of the
Executive's employment under this Agreement by reason of (i)
any breach by the Executive of his agreement not to compete or
solicit pursuant to Section 7 hereof; (ii) any violation of
Company policy which materially and adversely affects the
business or reputation of the Company; (iii) any act or
omission by the Executive constituting willful misconduct or
gross negligence, (iv) the Executive's conviction of a felony
(or a plea of guilty or NOLO CONTENDRE thereto); (v) the
Executive's conviction of any other criminal action (or a plea
of guilty or NOLO CONTENDRE thereto) that has or might
reasonably be expected to have an adverse effect on the
business or reputation of the Company or its subsidiaries;
(vi) the Executive's commission of an act of fraud; (vii) a
material breach by the Executive of any provision of this
Agreement which breach and the effects thereof remain uncured
for a period of thirty (30) days after written notice,
specifically identifying the breach, is given to the Executive
by the Company (however, it being expressly understood that
the Company need not provide any notice and may terminate the
Executive immediately where the Company in good faith believes
that the Executive's material breach is not curable within
thirty (30) days); or (viii) the Executive's voluntary
resignation without Good Reason and without having given the
Company at least thirty (30) days prior written notice.
(d) TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the employment of the Executive under this Agreement
at any time without cause with thirty (30) days' prior written
notice. Should the Executive be terminated pursuant to this
Section 6(d), he shall be entitled to Termination Payments as
provided for in Section 6(g).
(e) TERMINATION BY THE EXECUTIVE WITHOUT GOOD REASON. The
Executive may terminate his employment at any time without
Good Reason (as that term is defined in Section 6(f)),
provided that the Executive shall have given the Company at
least thirty (30) days prior written notice of such
termination. In the event of termination by the Executive
without Good Reason, the Executive's salary and benefits shall
continue during the notice period specified by the Executive
and shall cease thereafter.
(f) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The
Executive may terminate his employment at any time for Good
Reason. For purposes of this Agreement, "Good Reason" shall
mean any of the following occurrences but only if occurring
within twelve (12) months after a Change in Control:
(i) the diminution or change, without the
Executive's written consent, of his
position, title, authority, duties or
responsibilities as indicated in Section
1(a) hereof;
(ii) the Company requiring the Executive, without
his written consent, to be based at any
office or location or to relocate to any
location other than the Company's
headquarters which shall be located in the
Washington, D.C. area;
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(iii) any material breach by the Company of this
Agreement which is not cured within thirty
(30) days after notice is given to the
Company in accordance with this Agreement.
(G) TERMINATION PAYMENTS.
A. If the Executive's employment is terminated by the Company
(1) without Cause pursuant to Section 6(d) or (2) because of the
Executive's death or disability pursuant to Section 6(a) or (b) (each
of the circumstances in Section 6(g)(A)(1) and (2) being known as a
"Termination Event"), the Company shall provide the Executive (or, in
the case of his death, his estate, heirs or legal representatives) the
following (collectively, the "Termination Payments"), to be paid or
given within thirty (30) days of the Date of Termination (except with
respect to item (iii) below which will be granted and given in
accordance with Section 3(f) herein):
(i) a lump sum representing (1) the Executive's monthly
base salary as derived from the Executive's annual
salary and giving effect to all annual increases
thereto as provided in Section 3(a) herein, times the
greater of (y) the number of months remaining in the
current Term and (z) twenty four (24) months; and (2)
all other accrued and unpaid amounts due to the
Executive as of the Date of Termination (including,
without limitation, accrued vacation pay and
reimbursement of business expenses);
(ii) a lump sum representing all annual bonus amounts, as
provided for in Section 3(b) hereof, calculated on
the assumption that all performance criteria
objectives would have been exceeded, such that the
Executive would receive the maximum bonus established
by the President and Chief Operating Officer of the
Company to which the Executive would have been
entitled had he remained employed by the Company for
the longer of (y) the remainder of the current Term
or (z) twenty-four (24) months after the Date of
Termination; and
(iii) the vested options provided in Section 3(f).
Moreover, should the Company terminate the Executive
without Cause pursuant to Section 6(d) herein, the Executive shall
be entitled to the immediate vesting of such number of options as
are equal to the number which would have vested, ratably, monthly,
had the Executive remained employed for the longer of the remainder
of the current Term or twenty-four (24) months after the Date of
Termination.
B. If the Executive terminates his employment for Good Reason
as defined in Section 6(f) or a Termination Event occurs within twelve
months after a Change in Control, the Executive is entitled to the
Termination Payments as stated in Section 6(g)(A)(i) (ii) and (iii)
above as well as the following:
(iv) continuation of all life insurance and health
benefits, disability insurance and benefits and
reimbursement theretofore being provided to the
Executive and/or his family, or such other more
favorable benefits applicable to any senior executive
officer of the Company, to which the Executive would
have been entitled had he remained employed by the
Company for the longer of (Y) the remainder of the
current Term or (Z) twenty-four (24) months after the
Date of Termination, with the exception of the car
allowance as provided in Section 4(b) herein;
(v) Company contributions, to the extent permitted by
applicable law, to a SEP-XXX, Xxxxx or other
retirement mechanism reasonably selected by the
Executive sufficient to provide the same level of
retirement benefits the Executive would have received
if he had remained employed by the Company for the
longer of (Y) the remainder of the current Term or
(Z) twenty-four (24) months after the Date of
Termination provided, however, that the Company shall
make up the difference in cash payments directly to
the Executive to the extent that applicable law would
not permit it to make such contributions;
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C. In consideration of the Termination Payments
provided in this Section 6(g)(A) and (B), the Executive agrees
to execute a termination of employment agreement under which
the Executive agrees to fully release all claims against the
Company.
(h) TAX PROVISIONS. In the event that any payments under this
Agreement or any other compensation, benefit or other amount
from the Company for the benefit of the Executive are subject
to the tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code") (including any
applicable interest and penalties, the "Excise Tax"), no such
payment ("Parachute Payment") shall be reduced (except for
required tax withholdings) and the Company shall pay to the
Executive by the earlier of the date such Excise Tax is
withheld from payments made to the Executive or the date such
Excise Tax becomes due and payable by the Executive, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive (after deduction of any
Excise Tax on the Parachute Payments, taxes based upon the Tax
Rate (as defined below) upon the payment provided for by this
Section 6(h) and Excise Tax upon the payment provided for by
this Section 6(h)), shall be equal to the amount the Executive
would have received if no Excise Tax had been imposed. A Tax
counsel chosen by the Company's independent auditors, provided
such person is reasonably acceptable to the Executive ("Tax
Counsel"), shall determine in good faith whether any of the
Parachute Payments are subject to the Excise Tax and the
amount of any Excise Tax, and Tax Counsel shall promptly
notify the Executive of its determination. The Company and the
Executive shall file all tax returns and reports regarding
such Parachute Payments in a manner consistent with the
Company's reasonable good faith determination. For purposes of
determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay taxes at the Tax Rate applicable at the
time of the Gross-Up Payment. In the event that the Excise Tax
is subsequently determined to be less than the amount taken
into account hereunder at the time a Parachute Payment is
made, the Executive shall repay to the Company promptly
following the date that the amount of such reduction in Excise
Tax is finally determined the portion of the Gross-Up Payment
attributable to such reduction (without interest). In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time a Parachute Payment
is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall pay the Executive an
additional amount with respect to the Gross-Up Payment in
respect of such excess (plus any interest or penalties payable
in respect of such excess) at the time that the amount of such
excess is finally determined. The Company shall reimburse the
Executive for all reasonable fees, expenses, and costs related
to determining the reasonableness of any Company position in
connection with this paragraph and preparation of any tax
return or other filing that is affected by any matter
addressed in this paragraph, and any audit, litigation or
other proceeding that is affected by any matter addressed in
this Section 6(h) and an amount equal to the tax on such
amounts at the Executive's Tax Rate. For the purposes of the
foregoing, "Tax Rate" means the Executive's effective tax rate
based upon the combined federal and state and local income,
earnings, Medicare and any other tax rates applicable to the
Executive, all at the highest marginal rate of taxation in the
country and state of the Executive's residence on the date of
determination, net of the reduction in federal income taxes
which could be obtained by deduction of such state and local
taxes.
(i) NOTICE OF TERMINATION. Any termination of the Executive's
employment during the Term by the Company or by the Executive
shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 16 of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision
so indicated, and (iii) if applicable, specifies a termination
date. The failure by the Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company hereunder or
preclude the Executive or the Company, as applicable, from
asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
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(j) DATE OF TERMINATION. For purposes of this Agreement, "Date
of Termination" means (i) if the Executive's employment is
terminated by reason of death, the date of death; or (ii) if
the Executive's employment is terminated under any other
circumstances, the date of receipt of the Notice of
Termination by the party being so notified or any later date
specified therein. For purposes of this Agreement, the
Executive will be deemed to be employed through the end of the
calendar day on the Date of Termination.
7. COVENANTS OF EXECUTIVE
(a) COVENANT NOT TO COMPETE. In consideration of the
Executive's employment pursuant to this Agreement and for
other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the Executive agrees
that, so long as the Executive is employed by the Company
under this Agreement and for a period of twelve (12) months
following the termination of such employment (but only if the
Company has elected to enforce the restriction), the Executive
shall not, without the prior written consent of the Company,
either for the Executive or for any other person, firm or
corporation, own, manage, operate, control, be employed by,
participate in or be associated in any manner with the
ownership, management, operation or control of any business
providing Internet-related, E-commerce, web-hosting, network
or communication services competitive with the Company as of
the Date of Termination or within six (6) months thereafter.
The foregoing shall in no event restrict the Executive from:
(i) writing or teaching, whether on behalf of for-profit, or
not-for-profit institution(s); (ii) investing (without
participating in management or operation) in the securities of
any private or publicly traded corporation or entity; or (iii)
after termination of employment, becoming employed by a
hardware, software or other vendor to the Company, provided
that such vendor does not offer Internet-related, E-commerce,
web-hosting, network or communication services that are
competitive with the services offered by the Company as of the
Date of Termination or within six (6) months thereafter.
(b) NONSOLICITATION. In consideration of the Executive's
employment pursuant to this Agreement and for other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Executive agrees that, so long as the
Executive is employed by the Company under this Agreement and
for a period of eighteen (18) months following the termination
of such employment, the Executive agrees not to hire, solicit,
nor attempt to solicit for himself or any third party, the
services of any employee or subcontractor of the Company or
any of the Company's subsidiaries or affiliates without the
Company's prior written consent; provided, however, that the
Executive is not prevented from employing such person who
contacts the Executive on his or her own initiative and
without any direct or indirect solicitation by the Executive.
(c) BREACH/THREATENED BREACH. The Executive may request
permission from the Company's Board of Director's to engage in
activities which would otherwise be prohibited by Section 7(a)
or (b). The Company shall respond to such request within
thirty (30) days after receipt. The Company shall notify the
Executive in writing if it becomes aware of any breach or
threatened breach of any of the provisions in Section 7(a) or
(b), and the Executive shall have thirty (30) days after
receipt of such notice in which to cure or prevent the breach,
to the extent that the Executive is able to do so. The
Executive and the Company acknowledge that any breach or
threatened breach by the Executive of any of the provisions in
Section 7(a) or (b) above cannot be remedied by the recovery
of damages, and agree that in the event of any such breach or
threatened breach which is not cured with such 30-day period,
the Company may pursue injunctive relief for any such breach
or threatened breach. If a court of competent jurisdiction
determines that the Executive breached any of such provisions,
the Executive shall not be entitled to any Termination
Payments from and after date of the breach. In such event, the
Executive shall promptly repay any Termination Payments
previously made plus interest thereon from the date of such
payment(s) at 12% per annum. If, however, the Company has
suspended making such Termination Payments and a court of
competent jurisdiction finally determines that the Executive
did not breach such provision or determines such provision to
be unenforceable as applied to the Executive's conduct, the
Executive shall be entitled to receive any suspended
Termination Payment, plus interest thereon from the date when
due at 12% per annum. The Company may elect (once) to continue
paying the Termination Payments before a final decision has
been made by the court.
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(d) OWNERSHIP OF WORK PRODUCt. All copyrights, patents, trade
secrets, or other intellectual property rights associated with
any ideas, concepts, techniques, inventions, processes, or
works of authorship developed or created by the Executive
during the course of performing the Company's work
(collectively the "Work Product") shall belong exclusively to
the Company and shall, to the extent possible, be considered a
work made for hire for the Company within the meaning of Title
17 of the United States Code. The Executive automatically
assigns, and shall assign at the time of creation of the Work
Product, without any requirement of further consideration, any
right, title, or interest the Executive may have in such Work
Product, including any copyrights or other intellectual
property rights pertaining thereto. Upon request of the
Company, the Executive shall take such further actions,
including execution and delivery of instruments of conveyance,
as may be appropriate to give full and proper effect to such
assignment.
(e) EQUITABLE RELIEF. The Executive acknowledges and agrees
that the covenants and obligations of Executive contained in
Section 7 hereof relate to special, unique and extraordinary
matters and are reasonable and necessary to protect the
legitimate interests of the Company and that a breach of any
of the terms of such covenants and obligations will cause the
Company irreparable harm and injury for which adequate
remedies at law are not available. The Executive therefore
agrees that the Company need not prove actual damages in order
to obtain injunctive relief, a restraining order, an order of
specific performance or any other equitable relief (together,
"Equitable Relief") with respect to any of Executive's
obligations under Section 7. The Executive hereby waives any
claim or defense therein that the Company has an adequate
remedy at law or that money damages would provide an adequate
remedy. It shall, however, be the option of the Company
whether or not to seek Equitable Relief.
8. REPRESENTATIONS AND WARRANTIES.
(a) THE COMPANY. The Company hereby represents and warrants to
the Executive as follows:
(i) the Company is duly organized, validly
existing and in good standing under the laws
of the State of New York;
(ii) this Agreement has been duly authorized,
executed and delivered by the Company and
will constitute the legal, valid and binding
obligation of the Company, enforceable
against the Company in accordance with its
terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws
affecting the rights of creditors generally
and to general principles of equity whether
considered in a suit at law or in equity;
and
(iii) the execution and delivery of this Agreement
by the Company, the performance by the
Company of its obligations hereunder and the
consummation by the Company of the
transactions contemplated hereby will not
violate any agreement to which the Company
is a party.
(b) EXECUTIVE. The Executive hereby represents and warrants to
the Company as follows:
(i) this Agreement has been duly executed and
delivered by the Executive and will
constitute the legal, valid and binding
obligation of the Executive, enforceable
against the Executive in accordance with its
terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws
affecting the rights of creditors generally
and to general principles of equity whether
considered in a suit at law or in equity;
(ii) the execution and delivery of this Agreement
by Executive, the performance by the
Executive of his obligations hereunder and
the consummation by the Executive of the
transactions contemplated hereby will not
violate any agreement to which he is a
party; and
(iii) the Executive has made such investigations
of the business and properties of the
Company as he deems necessary or appropriate
before entering into this Agreement.
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9. TRANSFERABILITY.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws
of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, share exchange
or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume in writing
and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform
it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as defined herein
and any successor to its businesses and/or assets as aforesaid
that assumes and agrees to perform this Agreement by operation
of law, or otherwise. A failure of the Company to cause a
successor to assume this Agreement in any such transaction
shall be a breach of this Agreement by the Company.
10. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
plan, program, policy or practice provided by the Company and for which the
Executive may qualify (except with respect to any benefit to which the Executive
has waived his rights in writing), nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other contract or
agreement entered into after the date of this Agreement with the Company.
Amounts which are vested benefits or which the Executive is otherwise entitled
to receive under any benefit, plan, policy, practice or program of, or any
contract or agreement entered into with, the Company shall be payable in
accordance with such benefit, plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
11. FULL SETTLEMENT; MITIGATION, COSTS AFTER A CHANGE IN CONTROL. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts (including amounts for damages
for breach) payable to the Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced whether or not the Executive
obtains other employment. In addition, following a Change in Control only, the
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. Notwithstanding any other
provisions in this Agreement to the contrary, in the event that, following a
Change in Control, any successor in interest to the Company unsuccessfully
contests and/or challenges any of the Executive's rights under this Agreement,
then the successor in interest to the Company shall pay the Executive's
reasonable attorney's fees and costs incurred in such contest or challenge.
12. NO WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Executive or the Company may have hereunder shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
13. ARBITRATION. With the exception of disputes arising under Section 7
hereof, any dispute arising under this Agreement shall be settled by arbitration
in accordance with the rules of the American Arbitration Association and
judgment upon the award rendered by the arbitrator may be rendered in any court
having jurisdiction thereof. Arbitration hereunder shall be by a single
arbitrator appointed by agreement of the parties. The parties shall agree that
any arbitration award shall be final and binding on the parties. Except as
stated otherwise in Paragraph 11 of this Agreement, each party shall bear its
own costs and attorneys' fees associated with the arbitration.
14. SEVERABILITY. The provisions of this Agreement will be deemed
severable, and if any part of any provision is held to be illegal, void,
voidable, invalid, nonbinding, or unenforceable in its entirety or partially or
as to any party, for any reason, such provision may be changed, consistent with
the intent of the parties hereto, to the extent reasonably necessary to make the
provision, as so changed, legal, valid, binding, and enforceable. If any
provision of this Agreement is held to be illegal, void, voidable, invalid,
nonbinding, or unenforceable in its entirety or partially or as to any party,
for any reason, and if such provision cannot be changed consistent with the
intent of the parties hereto to make it fully legal, valid, binding, and
enforceable, then such provision will be stricken from
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this Agreement, and the remaining provisions of this Agreement will not in any
way be affected or impaired, but will remain in full force and effect.
15. ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains and its terms
constitute the entire agreement of the parties and supersedes all prior
agreements regarding the subject matter herein. This Agreement supersedes and
replaces any prior or contemporaneous agreements, negotiations, correspondence,
undertakings and communications of the parties, oral or written regarding the
subject matter herein. No amendment or modification of any provision of this
Agreement shall be effective unless in writing and signed by the party against
whom enforcement of such amendment or modification is sought.
16. NOTICES. All notices required to be given or which may be given
under this Agreement shall be in writing, delivered in accordance with one or
more of the following and deemed received upon the earlier of (i) when it is
personally delivered to the party, (ii) three (3) days after having been mailed
by certified mail, postage prepaid, return receipt requested, (iii) two (2) days
after having been sent via overnight delivery by a recognized overnight delivery
service or (iv) one (1) day after having been sent via facsimile transmission,
in each case addressed to the party intended to be notified at the address of
such party as set forth in the records of the Company or such other address as
such party may designate in writing to the other.
17. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Virginia without giving effect to the conflicts of law
principles thereof.
18. SURVIVAL. All provisions which may reasonably be interpreted or
construed to survive the expiration or termination of this Agreement shall
survive the expiration or termination of this Agreement.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
be one and the same instrument.
20. EXECUTION. This Agreement shall be deemed effective upon the
execution by the Company and the Executive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as the date first written above.
Executive:
/s/ XXXXX X. XXXXX
-----------------------
Xxxxx Xxxxx
PSINet Inc. ("Company"):
By: /s/ XXXXXXX X. XXXXXXXX
-------------------------
Title: Chairman and Chief Executive Officer
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